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Contingencies, Guarantees, Indemnifications and Leases | 12 Months Ended
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Dec. 31, 2024
Contingencies, Guarantees, Indemnifications and Leases |
Contingencies, Guarantees, Indemnifications and Leases | 16. Contingencies, Guarantees, Indemnifications and Leases Litigation and Regulatory Contingencies We are regularly involved in litigation, both as a defendant and as a plaintiff, but primarily as a defendant. Litigation naming us as a defendant ordinarily arises out of our business operations as a provider of asset management and accumulation products and services, individual life insurance, specialty benefits insurance and our investment activities. Some of the lawsuits may be class actions, or purport to be, and some may include claims for unspecified or substantial punitive and treble damages. We may discuss such litigation in one of three ways. We accrue a charge to income and disclose legal matters for which the chance of loss is probable and for which the amount of loss can be reasonably estimated. We may disclose contingencies for which the chance of loss is reasonably possible and provide an estimate of the possible loss or range of loss or a statement that such an estimate cannot be made. Finally, we may voluntarily disclose loss contingencies for which the chance of loss is remote in order to provide information concerning matters that potentially expose us to possible losses. In addition, regulatory bodies such as state insurance departments, the SEC, the Financial Industry Regulatory Authority (“FINRA”), the Department of Labor (“DOL”) and other regulatory agencies in the U.S. and in international locations in which we do business, regularly make inquiries and conduct examinations or investigations concerning our compliance with, among other things, insurance laws, securities laws, ERISA and laws governing the activities of broker-dealers. We receive requests from regulators and other governmental authorities relating to industry issues and may receive additional requests, including subpoenas and interrogatories, in the future. While the outcome of any pending or future litigation or regulatory matter cannot be predicted, management does not believe any such matter will have a material adverse effect on our business or financial position. To the extent such matters present a reasonably possible chance of loss, we are generally not able to estimate the possible loss or range of loss associated therewith. The outcome of such matters is always uncertain and unforeseen results can occur. It is possible that such outcomes could require us to pay damages or make other expenditures or establish accruals in amounts that we could not estimate as of December 31, 2024. Guarantees and Indemnifications In the normal course of business, we have provided guarantees to third parties primarily related to former subsidiaries and joint ventures. The terms of these agreements range in duration and often are not explicitly defined. The maximum exposure under these agreements as of December 31, 2024, was approximately $74.0 million. At inception, the fair value of such guarantees was insignificant. In addition, we believe the likelihood is remote that material payments will be required. Therefore, any liability accrued within our consolidated statements of financial position is insignificant. Should we be required to perform under these guarantees, we generally could recover a portion of the loss from third parties through recourse provisions included in agreements with such parties, the sale of assets held as collateral that can be liquidated in the event performance is required under the guarantees or other recourse generally available to us; therefore, such guarantees would not result in a material adverse effect on our business or financial position. While the likelihood is remote, such outcomes could materially affect net income in a particular quarter or annual period. Furthermore, in connection with our contingent funding agreements, we are required to purchase any principal and interest strips of U.S. Treasury securities that are due and not paid from the associated unconsolidated trusts. The maximum exposure under these agreements as of December 31, 2024, was $750.0 million. See Note 13, Debt, for further details. We manage mandatory privatized social security funds in Chile. By regulation, we have a required minimum guarantee on the funds’ relative return. Because the guarantee has no limitation with respect to duration or amount, the maximum exposure of the guarantee in the future is indeterminable. We are also subject to various other indemnification obligations issued in conjunction with divestitures, acquisitions, financing and reinsurance transactions whose terms range in duration and often are not explicitly defined. Certain portions of these indemnifications may be capped, while other portions are not subject to such limitations; therefore, the overall maximum amount of the obligation under the indemnifications cannot be reasonably estimated. At inception, the fair value of such indemnifications was insignificant. In addition, we believe the likelihood is remote that material payments will be required. Therefore, any liability accrued within our consolidated statements of financial position is insignificant. While we are unable to estimate with certainty the ultimate legal and financial liability with respect to these indemnifications, we believe that performance under these indemnifications would not result in a material adverse effect on our business or financial position. While the likelihood is remote, performance under these indemnifications could materially affect net income in a particular quarter or annual period. Guaranty Funds Under state insurance guaranty fund laws, insurers doing business in a state can be assessed, up to prescribed limits, for certain obligations of insolvent insurance companies to policyholders and claimants. A state’s fund assesses its members based on their pro rata market share of written premiums in the state for the classes of insurance for which the insolvent insurer was engaged. Some states permit member insurers to recover assessments paid through full or partial premium tax offsets. We accrue liabilities for guaranty fund assessments when an assessment is probable, can be reasonably estimated and when the event obligating us to pay has occurred. While we cannot predict the amount and timing of any future assessments, we have established reserves we believe are adequate for assessments relating to insurance companies that are currently subject to insolvency proceedings. As of December 31, 2024 and 2023, the liability balance for guaranty fund assessments, which is not discounted, was $29.3 million and $21.9 million, respectively, and was reported within other liabilities in the consolidated statements of financial position. As of December 31, 2024 and 2023, $17.5 million and $11.0 million, respectively, related to premium tax offsets were included in premiums due and other receivables in the consolidated statements of financial position. Leases As a lessee, we lease office space, data processing equipment, office furniture and office equipment under various operating leases. We also lease buildings and hardware storage equipment under finance leases. Lease assets and liabilities are recognized at the commencement of a lease based on the present value of lease payments over the lease term. We generally use our incremental borrowing rate based on the information available at the lease commencement date to determine the present value of lease payments. Lease term may include options to extend or terminate the lease when it is reasonably certain we will exercise the option. Leases with an initial term of twelve months or less are not recorded on the consolidated statements of financial position. We recognize lease expense for leases on a straight-line basis over the lease term. Some of our lease agreements include payments for property taxes, insurance, utilities or common area maintenance, which are not based on an index or rate. These payments are recognized in net income in the period in which the obligation has occurred. We sublease certain office space to third parties, which are primarily operating leases. We record sublease income on a straight-line basis over the lease term. The lease assets and liabilities were as follows: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | December 31, |
​ | ​ | 2024 | ​ | 2023 | ​
​ |  | (in millions) |
Assets |  | ​ |  | ​ | ​ |  | ​
Operating lease assets (1) | ​ | $ | 151.4 | ​ | $ | 176.7 | ​
Finance lease assets (1) | ​ |  | 67.6 | ​ |  | 73.9 | ​
Total lease assets | ​ | $ | 219.0 | ​ | $ | 250.6 | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Liabilities | ​ |  |  | ​ |  |  | ​
Operating lease liabilities (2) | ​ | $ | 150.6 | ​ | $ | 175.6 | ​
Finance lease liabilities (2) | ​ |  | 69.0 | ​ |  | 74.8 | ​
Total lease liabilities | ​ | $ | 219.6 | ​ | $ | 250.4 | ​
(1) | Operating and finance lease assets are primarily reported within property and equipment on the consolidated statements of financial position.
(2) | Operating and finance lease liabilities are reported within other liabilities on the consolidated statements of financial position.
The lease cost was as follows: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | For the year ended December 31,
​ | ​ | 2024 | ​ | 2023 | ​ | 2022
​ | ​ | (in millions)
Finance lease cost (1): | ​ | ​ | ​ |  | ​ |  | ​ | ​ | ​
Amortization of right-of-use assets | ​ | $ | 29.8 | ​ | $ | 32.9 | ​ | $ | 34.0
Interest on lease liabilities | ​ | ​ | 2.6 | ​ | ​ | 1.9 | ​ | ​ | 1.2
Operating lease cost (1) | ​ | ​ | 55.3 | ​ | ​ | 56.1 | ​ | ​ | 61.6
Other lease cost (1) (2) | ​ | ​ | 9.2 | ​ | ​ | 9.5 | ​ | ​ | 12.4
Sublease income (3) | ​ | ​ | (0.5) | ​ | ​ | (0.3) | ​ | ​ | (1.5)
Total lease cost | ​ | $ | 96.4 | ​ | $ | 100.1 | ​ | $ | 107.7
(1) | Finance, operating and other lease costs are primarily included in operating expenses on the consolidated statements of operations.
(2) | Other lease cost primarily reflects variable and short-term lease costs.
(3) | Sublease income is included in fees and other revenues on the consolidated statements of operations.
​ ​ Payments for operating leases for the years ended December 31, 2024, 2023 and 2022, were $50.3 million, $60.1 million and $58.3 million, respectively. Payments for finance leases for the years ended December 31, 2024, 2023 and 2022, were $32.0 million, $34.3 million and $35.1 million, respectively. The following represents future payments due by period for lease obligations: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ |  | Operating leases |  | Finance leases |  | Total |
​ | ​ | (in millions) | ​
For the twelve months ending December 31: | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
2025 | ​ | $ | 46.1 | ​ | $ | 29.1 | ​ | $ | 75.2 | ​
2026 | ​ | ​ | 41.2 | ​ | ​ | 24.5 | ​ | ​ | 65.7 | ​
2027 | ​ | ​ | 32.8 | ​ | ​ | 14.9 | ​ | ​ | 47.7 | ​
2028 | ​ | ​ | 18.6 | ​ | ​ | 4.3 | ​ | ​ | 22.9 | ​
2029 | ​ | ​ | 8.5 | ​ | ​ | — | ​ | ​ | 8.5 | ​
2030 and thereafter | ​ | ​ | 20.7 | ​ | ​ | — | ​ | ​ | 20.7 | ​
Total lease payments | ​ | ​ | 167.9 | ​ | ​ | 72.8 | ​ | ​ | 240.7 | ​
Less: interest | ​ | ​ | 17.3 | ​ | ​ | 3.8 | ​ | ​ | 21.1 | ​
Present value of lease liabilities | ​ | $ | 150.6 | ​ | $ | 69.0 | ​ | $ | 219.6 | ​
​ The weighted-average remaining lease term and weighted-average discount rates were as follows: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | For the year ended December 31, |
​ | ​ | 2024 | ​ | 2023 | ​ | 2022 | ​
Weighted-average remaining lease term (in years): | ​ | ​ |  |  | ​ | ​ | ​
Operating leases | ​ | 5.5 |  | 6.0 |  | 6.4 | ​
Finance leases | ​ | 2.8 |  | 3.0 |  | 2.8 | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Weighted-average discount rate: | ​ | ​ |  | ​ |  | ​ | ​
Operating leases | ​ | 3.7 | % | 3.6 | % | 3.6 | %
Finance leases | ​ | 4.0 | % | 3.5 | % | 1.7 | %
​

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